"The nonprofit Excellent Schools Detroit is launching a common enrollment system today that is designed to make signing up for school easier and more equitable for Detroit families.

"Parents of children entering kindergarten or ninth grade in the fall will be able to use the new system during a 30-day window starting April 1. More than 40 schools are on board, most of them charters, as well as one private school

"Detroit Public Schools was part of the planning process but is not participating. Spokeswoman Michelle Zdrodowski said the district is in a state of transition and whether it joins is a decision that should be made by a school board once the district transitions from emergency management back to local control.
...
"Common enrollment has been a hot topic for years in conversations about education reform in Detroit.

"The report highlighted the complexity of Detroit's public school market, with roughly 100 schools in DPS, dozens of charter school districts (made up of about 100 schools) and 15 schools in the EAA, the state reform district. It said the system is hard for parents to navigate and fuels unhealthy competition among schools for students.

"Families have been disappointed. Families have been hurt, and they don't feel a lot of trust in the different systems," said Maria Montoya, director of communications and strategic partnerships for Enroll Detroit. She was part of the team that helped design the common enrollment system in New Orleans, called OneApp, in 2012.

"The idea that their application will be fairly considered, and it's not a person (at a school) picking them out and saying, 'We don't need any more autistic kids,' it's really hard for them to believe."

"A committee that included officials from Excellent Schools Detroit, DPS, charter schools, the Education Achievement Authority, community groups and parents designed Enroll Detroit. It was built by the New York-based Institute for Innovation in Public School Choice and Acumen Solutions."

Wednesday, March 30, 2016

When I recently visited Duke Law School I had the pleasure of talking with Joseph Blocher and Mitu Gulati about their very innovative thoughts on resettling refugees, by giving them legally recognized financial claims against the countries that made them refugees, that could be pursued by their host countries. Here's a link to their paper:

The unprecedented scale of the modern refugee crisis demands novel legal solutions. As a matter of national incentives, the goal must be to design mechanisms that discourage countries from creating refugees, and encourages other countries to welcome them. One way to achieve this would be to recognize that persecuted refugee groups have a financial claim against their countries of origin, and that this claim can be traded to host nations in exchange for acceptance. Modifications to the international apparatus would be necessary, but the basic legal elements of this proposal already exist. In short, international law can and should give refugees a legal asset, give host nations incentives to accept them, and give oppressive countries of origin the bill.

Tuesday, March 29, 2016

Abstract: We examine the state of game theory. Many important questions have been answered, and
game theoretic methods are now central to much economic investigation. We suggest areas where
further advances are important, and argue that models of learning and of social preferences
provide promising routes for improving and widening game theory’s predictive power, while
preserving the sucesses of existing theory where it works well. We emphasize in particular the
need for better understanding of the speed with which learning takes place, and of the evolution
of social norms.

We propose a theoretical model to explain two salient features of the U.S. stock exchange industry: (i) sizable dispersion and frequent changes in stock exchange fees; and (ii) the proliferation of stock exchanges offering identical transaction services, highlighting the role of discrete pricing. Exchange operators in the United States compete for order flow by setting “make” fees for limit orders (“makers”) and “take” fees for market orders (“takers”). When traders can quote continuous prices, the manner in which operators divide the total fee between makers and takers is irrelevant because traders can choose prices that perfectly counteract any fee division. If such is the case, order flow consolidates on the exchange with the lowest total fee. The one-cent minimum tick size imposed by the U.S. Securities and Exchange Commission’s Rule 612(c) of Regulation National Market Systems for traders prevents perfect neutralization and eliminates mutually agreeable trades at price levels within a tick. These frictions (i) create both scope and incentive for an operator to establish multiple exchanges that differ in fee structure in order to engage in second-degree price discrimination; and (ii) lead to mixed-strategy equilibria with positive profits for competing operators, rather than to zero-fee, zero-profit Bertrand equilibrium. Policy proposals that require exchanges to charge one side only or to divide the total fee equally between the two sides would lead to zero make and take fees, but the welfare effects of these two proposals are mixed under tick size constraints.

In some years that meant competing with a hot new company that aggressively courted every fresh graduate with promises of stock options and IPO glory. In other years there wasn’t a specific company so much as an entire rising industry looking for people (I’m looking at you cloud services, driverless cars, and peer-to-peer sharing). Either way, we understood the yearly back and forth. Our job was to explain to candidates how we stacked up, and more importantly, why a career at Jane Street might be the right choice for many of them.

But this year I got to learn a new name for a new challenge. “Unraveling”.

I first encountered it in a book I was reading for fun: "Who Gets What, and Why", by the Nobel Prize-winning economist Alvin Roth. He does a lovely job explaining the idea of a matching market. In a matching market each person wants only one of each item, each item is unique, and each item can be given to at most one person at a time. Jobs are a classic matching market, and just like any market, matching markets can work well, or poorly.

Unraveling is one of the primary things that makes a matching market fail. When a market unravels matches start to happen earlier and earlier, to the point where people no longer get a complete view of their options. In the book Roth relates the story of a person who stepped off of a plane to find three voicemails on his phone. The first offered him a job, the second urged him to respond soon, and the last rescinded the offer because he hadn't responded quickly enough.

We call them exploding offers, and this year they have gotten completely out of hand as companies race to the bottom in their efforts to recruit the next wave of interns and fresh graduates.

Colleges try to impose deadline limits explicitly to stop unraveling, and in the past these have largely been honored. The cheating and fudging, such as it was, was kept to the fringes. But this year it seems like the seal is broken, and we've seen major companies delivering internship and full-time offers with 2 week (and less) hard deadlines. Other companies now routinely deliver expiring bonus offers for signing early. Many of these offers circumvent or outright break the guidelines set down by schools, and if past matching markets are a model for this one, next year will come with even earlier offers and worse conditions.

This unraveling has been the subject of a lot of discussion, both internally at Jane Street and with the various schools we recruit at, who see it - rightly - as bad for their students. How can someone make a thoughtful decision about where they want to build a career without the time to interview at more than one or two places? Unfortunately, most of this discussion is out of the public light, and so the unraveling continues.

We can't control the actions of others, but we also don’t have to follow the herd, so we'd like to be clear:

Jane Street is committed to making sure that you have the time and information you need to decide on an offer from us. Our offer letters do have good-until dates as a matter of professional practice, but we try to work with every candidate to choose a date that works for them. We are also happy to extend the date if something unexpected comes up, or, frankly, if someone just needs more time.

Choosing where to start your career is a big decision and we hope you have the time to make a good one.

Friday, March 25, 2016

Here's a video of a public lecture followed by a discussion (about half an hour each) about my book Who Gets What and Why, which just came out in German. The location of the lecture was once an East German government building where the head of state had his office, and is now a business school, the European School for Management and Technology. I was introduced by Gerhard Caspar, the head of the American Academy in Berlin and former president of Stanford. (My talk begins about minute 11:30 of the video, the discussion begins about minute 41, with Christoph von Marschall, Managing Editor of the newspaper Der Tagesspiegel, which touches on market designers in Germany, the legal barriers to kidney exchange there, and refugee resettlement.)

"For those already willing to donate to anyone, 63 percent said that the payment would make them even more likely to do it. Of those in the second group, composed of those willing to donate to a restricted group, 60 percent said they would be more likely to consider it. And in the third group that was unwilling to donate, 26 percent said they would reconsider because of the money.

The researchers also found that there were some people who would be more reluctant to donate if money was involved. In the first group 8 percent would be less willing, 9 percent in the second group, and 18 percent in the third group.

"Thus," the researchers concluded, "payment motivated more US voters to positively consider donor nephrectomy rather than to reject the notion of donating a kidney."
**********

Alvin E. Roth, The Craig and Susan McCaw Professor of Economics, Stanford University, and co-recipient, 2012 Nobel Memorial Prize in Economic Sciences will discuss his book, "Who Gets What - And Why: The Hidden World of Matchmaking and Market Design." A bagged lunch will be served to attendees on a first come, first serve basis. Sponsored by The Duke Project on Law and Markets. Please contact Victoria Zellefrow (victoria.zellefrow@law.duke.edu) with any further questions.

I'll also speak at the Law and Markets faculty workshop, on global kidney exchange. Kim Krawiec is the host, and here's the title of her blog post yesterday: Tomorrow Is Al Roth Day!
(You can see why I can't resist her invitation to talk...)

Tuesday, March 22, 2016

Alvin E. Roth, who shared the 2012 Nobel Memorial Prize in Economics, will discuss “Who Gets What and Why: The Economics of Matching and Market Design” from 4 to 5:30 p.m. Tuesday, March 22, in Wilson Hall, Room 103. A reception will follow his talk, which is part of the Department of Economics’Steine Lecture Series.

Roth is the Craig and Susan McCaw Professor of Economics at Stanford University and the Gund Professor of Economics and Business Administration, Emeritus, at Harvard University. He works in the areas of game theory, experimental economics and market design.

Roth is responsible for re-designing the National Resident Matching Program, through which approximately 20,000 doctors a year find their first employment as residents at American hospitals. He also is one of the founders and designers of the New England Program for Kidney Exchange, which serves incompatible patient-donor pairs.

Roth is president-elect of the American Economic Association and served for many years as chair of the association’s Ad Hoc Committee on the Job Market, which has designed a number of recent changes in the market for new Ph.D. economists. He is a fellow of the American Academy of Arts and Sciences and the Econometric Society and has been a Guggenheim and Sloan fellow. He received his Ph.D. from Stanford University.

The David Steine Lectureship was established in 1978 by multiple donors to provide support for an annual lecture in the Department of Economics in the College of Arts and Science. The lecture honors former Vanderbilt professor David L. Steine and addresses an economic problem of interest to the general public.

"Transplant surgeons at two US hospitals are about to do something long considered taboo: put kidneys from donors with hepatitis C into recipients without the infection.

In first-in-the-world clinical trials scheduled to launch later this spring, independent teams from the University of Pennsylvania and Johns Hopkins University will take kidneys from deceased carriers of the hep C virus, put them into patients with renal failure, and then give them a 12-week course of an antiviral therapy in the hopes that they will emerge infection-free.

If successful, the trials could enable hundreds of transplants each year for patients who might otherwise die waiting for a kidney.
...
"The idea behind the two upcoming trials is to take older patients who have long waits ahead and don’t have living donors, and allow them to jump the queue — if they’re willing to take on a bit more risk.

The risk of hep C infection is deemed manageable, and ethically acceptable, thanks to the latest wave of hep C medications, which offer cure rates of 95 percent and higher.

“For a 60-year-old diabetic who doesn’t have a living donor, who hasn’t been on the wait list very long, they’re miserable on dialysis, their mortality rate is high — that person might roll the dice on this and say, ‘You know what? These drugs work, and it’s worth it to me to get off dialysis sooner,’” said Dr. Heather Morris, a nephrologist at the Columbia University Medical Center.

“Initially, we’re targeting the population that has the highest mortality risk while waiting for a transplant,” explained Dr. Christine Durand, a transplant infectious disease specialist at Johns Hopkins. But if the technique proves safe and effective, she added, organs from hep C patients might one day join the regular organ pool.

“If it was me who needed a kidney,” Durand said, “I would sign up for this.”
...
"Both the Penn and Hopkins studies are backed by Merck, the drug company that makes Zepatier, the latest hep C agent to hit the market. The company is supplying its $54,500-per-patient medicine for free and providing additional financial support for staff and lab tests.
**************
Here's the story about HIV kidneys:

"The organs would be given only to patients who also are HIV-positive and have agreed to accept them. The transplants will be part of research that will carefully monitor both the transplant and the potentially deadly disease.

Johns Hopkins Hospital in Baltimore announced last month that it would be the first to offer HIV-positive organs to HIV-positive patients on its waiting list. The advantage of such transplants is that they might reduce waiting times for HIV-positive patients and also free up other organs for patients who don't have the immune-weakening virus.

The new approach was made possible by the HIV Organ Policy Equity (HOPE) Act of 2013. Before that, it was illegal to transplant organs from people with HIV. The ban was enacted when the blood-borne virus was considered a death sentence, but now that it is so much more manageable, people who are infected often die of something else.

The Philadelphia hospital has now received permission from the United Network for Organ Sharing (UNOS) to begin what are called HIV-positive to HIV-positive liver and kidney transplants. Doctors expect that most of the transplanted organs will be kidneys and that the first case will occur this year. The hospital currently has 45 HIV-positive patients either on its waiting list for kidneys or being evaluated for transplants."

The Match was introduced in 1952 to address many of the uncertainties of residency applications. Before, medical students had to seek residency spots by themselves. But this decentralized system was rife with coercion, favoritism and deceit. Residency programs would demand medical students accept offers before applicants could consider other options. Students and programs betrayed one another by reneging on commitments.

The Match provides structure to the process. Students apply for residency positions through a common application. Strict policies govern communication between programs and applicants, with public reporting of violations. Applicants and programs submit ranking preferences into a centralized system. The Match algorithm couples these rankings and establishes binding contracts for residency positions.

Last year saw record numbers, when nearly 35,000 applicants submitted ranking preferences for roughly 30,000 residency slots. Medical schools host ceremonies to celebrate the event. Researchers Alvin Roth and Lloyd Shapley even won the 2012 Nobel Prize in Economics for their work related to the Match."*****************Here's the NRMP page on why it takes 23 days from the time preferences are submitted to announce the match results

physicians and politicians for more living donations German reservations "no longer fit into the time", criticizing physicians. The exchange between unacquainted pairs should be allowed.]

"The demand of the American Nobel Prize winner Alvin Roth, to facilitate in Germany living donation of organs and to amend the Transplantation Act accordingly, has met with doctors and politicians on consent.

The requirement that living donation - this question come kidney or parts of the liver - may come only from the direct family environment, are too strict, the economists had in Tagesspiegel criticizes. As in other European countries and the United States would also in Germany more distant relatives, friends or colleagues may donate writes Roth. In addition, an exchange between unacquainted pairs should be allowed (cross-donation, crossover Donation) at incompatible donor organs."

***************

Here are my two earlier posts on the subject, with links to my earlier op-ed and the one by Axel Ockenfels and Thomas Gutmann

During my recent visit to Germany, I spoke with a number of people about the fact that the German transplant law effectively outlaws kidney exchange. I was invited to write an op-ed on the subject for the German newspaper Der Tagesspiegel, and it has just appeared:

Kidney failure is epidemic around the world, and a shortage
of organs for transplantation condemns many patients to dialysis, and early
death.

Most transplantable organs come from deceased donors, and
there aren’t enough to fill the need. But because healthy people have two
kidneys and can remain healthy with one, a healthy person can donate a kidney to
a sick person. A living-donor kidney works
better than a deceased-donor kidney.

In the U.S. we now have around as many living donors as
deceased donors (although we still have more deceased-donor transplants, since
a deceased donor donates both kidneys).

But living donation isn’t always possible, even when a
willing donor is available, because a kidney must be well-matched to its
recipient. Often the life-saving gift cannot be given, because the donor’s
kidney is incompatible with the patient. (It is now sometimes possible to successfully
transplant an incompatible kidney, but, like a deceased-donor kidney, this does
not keep the patient as healthy for as long as would a compatible living-donor kidney.)

In the U.S., there is a way for incompatible patient-donor
pairs to help each other, through what we call kidney exchange, or kidney
paired-donation. In its simplest form, two incompatible patient-donor pairs
are identified by their doctors such that each patient is compatible with the
kidney of the other patient’s donor. Then four surgeries are performed, two
nephrectomies and two transplants, so that each donor gives a kidney and each
patient receives a compatible kidney. Kidney exchange has become a standard
form of transplantation in the U.S., and has saved thousands of lives. (This is
one of the “matching” markets I helped design, and wrote about in my recently
translated book, Wer kriegt was - und
warum?.)

Notice that no money changes hands in this paired donation.
It is just an exchange of gifts between two patient-donor pairs, which allows
each donor to save a life and see his intended recipient restored to good
health.

Laws around the world prohibit buying a kidney for
transplantation, because of fear that allowing organs to be sold would exploit
the poor and vulnerable. (The single exception is Iran, which has a monetary
market for kidneys.) But German transplant law imposes a severe further restriction: a
patient may receive a living-donor kidney only from a member of his or her
immediate family. This means that, unless a judge intervenes, kidney exchanges
are illegal in Germany. (This law also restricts the number of direct living
donations in Germany compared to countries like the U.S., in which uncles,
cousins, friends, colleagues, members of the same church, etc., are often
living donors.)

I surmise that the reason for this strict limitation in
German law is to remove any possibility that a kidney being transplanted has
been purchased rather than freely given. But if when you want to give a kidney
to your brother there is no suspicion that you are a paid organ-seller, you
should remain above suspicion even if your kidney is incompatible with your
brother. Kidney exchange allows you to give a kidney and save a life, and have your
brother’s life saved. Kidney paired donation is a mutually beneficial exchange
of life-saving gifts, not a commercial transaction.

The U.S. law that includes the prohibition on organ sales is
the National Organ Transplant Act of 1984. When American surgeons explored kidney
exchange in the first decade of this century, it wasn’t initially clear what
its legal status might be, but in 2007 Congress passed an amendment to the NOTA
making kidney exchange explicitly legal.
Kidney exchange is legal elsewhere in Europe, and is well developed in
the Netherlands and Britain. A similar amendment to the German law, or even
instructions to judges that kidney exchanges should be allowed after being
examined, could save the lives of many patients in Germany, without opening to
door to commercial transactions in body parts.

Tuesday, March 15, 2016

I've been asked to write a short "intellectual obituary" about Lloyd's work, which I'll try to do in the coming days. In the meantime, here's a paragraph:

Lloyd Shapley was one of the founding giants of game theory. He
shared the 2012 Nobel Prize in Economics for his seminal work with David Gale on stable matching,
but he could have won a Nobel for any of a number of his papers that initiated
whole literatures: he was one of the very first to formulate and study the core
of a game, he and John Milnor initiated the study of games with a continuum of
players (“Oceanic Games”), he invented the Shapley value, he and Martin Shubik
showed how it could be useful in studying voting and political processes, and
his paper on Stochastic Games initiated the study of Markov Decision Processes
as well as Markov Games.

"One of Mr Shapley’s better-known achievements is the Gale-Shapley matching algorithm, which he devised after an old university friend (David Gale) asked for help to solve a problem. Given two groups of people, each with slightly different preferences, is there a way to match them in such a way that people aren’t constantly ditching their partner? After much head-scratching, Mr Gale suspected there was no solution, but could not prove it. As Mr Shapley told it, the solution took him the best part of an afternoon. "

“Professor Shapley was one of the giants of game theory,” said UCLA Chancellor Gene Block. “His work in market design laid the foundation for advances in the matching of kidney donors with transplant recipients, in college admissions procedures, and in assignment of children to public schools. The entire UCLA community joins Professor Shapley’s family in mourning his passing.”

In their 1962 paper, “College admissions and the stability of marriage,” Shapley and mathematician/economist David Gale demonstrated how to match members of two groups — for example, men and women in a “marriage market” — in a way that is stable."

"As I prepared to leave California for Illinois, I paid a visit to Lloyd Shapley at the Rand Corporation in Santa Monica to tell him about my work. I recall a pleasant visit, in which he correctly conjectured how the proof of my fixed point theorem worked, and (if I recall correctly) ended with him driving me to the airport in his station wagon. "

Monday, March 14, 2016

In Germany, kidney exchange isn't legal (German law only permits a patient to receive an organ from a member of his immediate family). Here's an op-ed saying that should change, by Axel Ockenfels and Thomas Gutmann in the Sueddeutsche Zeitung:

Sunday, March 13, 2016

Photographs for sale can be either of specific individuals or "stock photos" of generic images. Here's a picture of me that seems to be both, judging from the keywords the photographer or seller, Richard Kalvar at Magnum Photos, has assigned to it (such as "Man - 60 years and older"):

Saturday, March 12, 2016

I turned on my phone after landing from Frankfurt, and found an email from Lloyd's son Peter Shapley, saying that Lloyd passed away in his sleep at
around 12:45 AM today, March 12.The world is the less...

Update: see some obituaries here-- Lloyd Shapley: obituaries, and memories

Findings in behavioral science, including psychology, have influenced policies and reforms in many nations. Choice architecture can affect outcomes even if material incentives are not involved. In some contexts, default rules, simplification, and social norms have had even larger effects than significant economic incentives. Psychological research is helping to inform initiatives in savings, finance, highway safety, consumer protection, energy, climate change, obesity, education, poverty, development, crime, corruption, health, and the environment. No nation has yet created a council of psychological advisers, but the role of behavioral research in policy domains is likely to grow in the coming years, especially in light of the mounting interest in promoting ease and simplification (“navigability”); in increasing effectiveness, economic growth, and competitiveness; and in providing low-cost, choice-preserving approaches.

From because of cooler economist - Alvin Roth has indeed studied hard subjects with mathematics and computer science. But he loves not only the numbers, but also the people. It shows the same. He greeted with a winning smile, leaving a to an exciting conversation about refugees and donor kidneys, financial markets and future presidents.

The World: Some economists want to apply to the distribution of refugees in Europe your design markets. Is this a good idea?

Alvin Roth: Essentially, yes. The distribution of refugees is a so-called matching market - on the right pairing it depends, in this case of people and place. The people themselves have preferences where they want to live. At the same time they should be able to be easily integrated into the economy. For that we should allow an orderly exchange of information. According Dublin procedure an applicant must his application but ask in the country where he first arrived. This does not add up.